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AXIS Capital (AXS) Q2 Earnings, Revenues Top on Higher Premiums
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AXIS Capital Holdings Limited (AXS - Free Report) posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year.
The insurer’s results reflect higher net premiums earned, partially offset by a decrease in net investment income and higher expenses. Due to higher cat losses, underwriting income declined, resulting in deterioration in the combined ratio.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments.
Total expenses in the quarter under review increased 7.6% year over year to $1.2 billion, attributable to higher net losses and loss expenses, acquisition costs, increased general and administrative expenses, higher interest expense and financing costs and amortization of intangible assets.
Pre-tax catastrophe and weather-related losses, net of reinsurance, were $67 million, primarily attributable to South Africa floods, and the high frequency of small to mid-sized other weather-related events that occurred worldwide. This compares unfavorably with the year-ago loss of $29 million.
AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 basis points (bps) to 93.4.
Segment Results
Insurance: Gross premiums written improved 16% year over year to $1.5 billion, driven by increases in property and liability lines, driven by new business and favorable rate changes, professional lines due to favorable rate change, and accident and health lines due to new business.
Net premiums earned increased 22% year over year to $768.7 million.
Underwriting income of $93.8 million increased 0.3% year over year. The combined ratio deteriorated 250 bps to 87.8%.
Reinsurance: Gross premiums written decreased 4.3% year over year to $643.9 billion, primarily attributable to decreases in catastrophe and property lines due to non-renewals and decreased line sizes. Nonetheless, the decline was limited by an increase in credit and surety lines driven by new business, and an increase in professional lines due to favorable market conditions.
Net premiums earned decreased 3.2% year over year to $508.3 million.
Underwriting income of $44.4 million plunged 58.2% year over year. The combined ratio deteriorated 530 bps year over year to 95.9.
Financial Update
AXIS Capital exited the second quarter with cash and cash equivalents of $1.5 billion, up 13.7% over the level from 2021 end.
Debts were $1.3 billion at quarter-end, up 0.1% from the 2021-end level.
Book value per share decreased 6.8% sequentially to $47.62, as of Jun 30, 2022, due to net unrealized losses reported in other comprehensive income (loss) and common share dividendsdeclared, partially offset by net income generated.
Annualized operating return on equity was 13.7% in the second quarter, down 70 bps year over year.
Capital Deployment Update
AXIS Capital bought back 0.6 million shares for $35 million. As of Jun 30, 2022, AXIS had $65 million remaining under authorization.
Business Update
AXIS exited from reinsurance property and catastrophe lines. This completed the shift of AXIS Re to a specialist reinsurer, which aligns with its efforts to grow profitably with lower volatility and establish leadership in the specialist space. Thus, the insurer intensified its focus on attractive Casualty, Specialty, A&H, and Credit lines.
AXIS’ reorganization expenses related to exit from the property reinsurance business were $16 million.
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.
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AXIS Capital (AXS) Q2 Earnings, Revenues Top on Higher Premiums
AXIS Capital Holdings Limited (AXS - Free Report) posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year.
The insurer’s results reflect higher net premiums earned, partially offset by a decrease in net investment income and higher expenses. Due to higher cat losses, underwriting income declined, resulting in deterioration in the combined ratio.
Axis Capital Holdings Limited Price, Consensus and EPS Surprise
Axis Capital Holdings Limited price-consensus-eps-surprise-chart | Axis Capital Holdings Limited Quote
Quarterly Operational Update
Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments.
Total expenses in the quarter under review increased 7.6% year over year to $1.2 billion, attributable to higher net losses and loss expenses, acquisition costs, increased general and administrative expenses, higher interest expense and financing costs and amortization of intangible assets.
Pre-tax catastrophe and weather-related losses, net of reinsurance, were $67 million, primarily attributable to South Africa floods, and the high frequency of small to mid-sized other weather-related events that occurred worldwide. This compares unfavorably with the year-ago loss of $29 million.
AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 basis points (bps) to 93.4.
Segment Results
Insurance: Gross premiums written improved 16% year over year to $1.5 billion, driven by increases in property and liability lines, driven by new business and favorable rate changes, professional lines due to favorable rate change, and accident and health lines due to new business.
Net premiums earned increased 22% year over year to $768.7 million.
Underwriting income of $93.8 million increased 0.3% year over year. The combined ratio deteriorated 250 bps to 87.8%.
Reinsurance: Gross premiums written decreased 4.3% year over year to $643.9 billion, primarily attributable to decreases in catastrophe and property lines due to non-renewals and decreased line sizes. Nonetheless, the decline was limited by an increase in credit and surety lines driven by new business, and an increase in professional lines due to favorable market conditions.
Net premiums earned decreased 3.2% year over year to $508.3 million.
Underwriting income of $44.4 million plunged 58.2% year over year. The combined ratio deteriorated 530 bps year over year to 95.9.
Financial Update
AXIS Capital exited the second quarter with cash and cash equivalents of $1.5 billion, up 13.7% over the level from 2021 end.
Debts were $1.3 billion at quarter-end, up 0.1% from the 2021-end level.
Book value per share decreased 6.8% sequentially to $47.62, as of Jun 30, 2022, due to net unrealized losses reported in other comprehensive income (loss) and common share dividendsdeclared, partially offset by net income generated.
Annualized operating return on equity was 13.7% in the second quarter, down 70 bps year over year.
Capital Deployment Update
AXIS Capital bought back 0.6 million shares for $35 million. As of Jun 30, 2022, AXIS had $65 million remaining under authorization.
Business Update
AXIS exited from reinsurance property and catastrophe lines. This completed the shift of AXIS Re to a specialist reinsurer, which aligns with its efforts to grow profitably with lower volatility and establish leadership in the specialist space. Thus, the insurer intensified its focus on attractive Casualty, Specialty, A&H, and Credit lines.
AXIS’ reorganization expenses related to exit from the property reinsurance business were $16 million.
Zacks Rank
AXIS Capital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other P&C Insurers
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.